Export Stocks To Pick Up Amid Elevated USD

Market Review

Malaysia: The FBMKLCI (+0.43%) ended higher at 1602.99 pts, driven by key heavyweights such as YTLPOWR and PBBANK. The Energy (+0.83%) sector saw the largest rally, led by YINSON and DAYANG, while both the Construction (-0.34%) and Transportation & Logistic (-0.34%) sectors ended as the worst-performing sectors.

Global markets: Many global markets were closed yesterday for Christmas holiday. Wall Street extended its gains and closed higher on Tuesday, with tech stocks led the advancement again. Similarly, both the European and Asian markets also ended higher due to gains in the Japan automotive sector.

The Day Ahead

The local bourse traded higher, surpassing the 1,600 level, as buying interest was observed across blue-chip stocks during the window-dressing period. In the US, Wall Street continued its upward trend on Christmas Eve, led by tech stocks, including a 7.4% surge in TESLA and gains of more than 1% in both AMAZON and META. Meanwhile, traders will keep an eye on key economic data, such as initial jobless claims later today and crude oil inventories on Friday. In the commodities market, Brent crude oil ended higher, closing above the USD73 level. Gold prices steadied around USD2,610-2,620, while CPO prices finally rebounded above the RM4,500 mark.

Sector Focus: With the slight rebound in crude oil prices, traders may focus on O&G- related counters ahead of the US crude oil inventories data release this Friday. Additionally, as the government has removed the 85% demand cap under the self- consumption (SelCo) program and allowed solar installations on land and water starting January 2025, traders can look for opportunities in solar-related companies. We remain optimistic about the data center value chain industries within the Construction, Building Materials, Technology, and Utilities sectors. Furthermore, the market is likely to favour Technology stocks amid the weakening ringgit bias.

FBMKLCI Technical Outlook

Despite closing above the 1,600 psychological mark, the FBMKLCI is still in its downtrend mode, trading below all the MA lines. The MACD Histogram expanded negatively, while the RSI is below 50, suggesting that the momentum is negative. Resistance is anticipated around 1,617-1,622, and support is set at 1,582-1,587.

Company Briefs

Boustead Heavy Industries Corp Bhd's (BHIC) shareholders have approved the disposal of the fabrication and engineering company's 51% equity stake in littoral combat ship subcontractor Contraves Advanced Devices Sdn Bhd (CAD) to German defence firm Rheinmetall AG for RM54m. The disposal will result in a loss of RM14.82m for BHIC, which has already been recognised in its September quarter. (The Edge)

East Navigators Capital Ltd is no longer a substantial shareholder in Pharmaniaga Bhd (PHARMA) after disposing of 25.35m shares or a 1.76% stake for RM5.32m. The identity of the buyer was not disclosed. A check with Bloomberg showed that the shares were traded in a single block on Tuesday at 21 sen per share, a discount of 41.7% or 15 sen to Pharmaniaga's last closing price of 36 sen. (The Edge)

MMAG Holdings Bhd (MMAG) has acquired a Boeing B737-400SF aircraft from Japan-based JPA No 161 Co Ltd for US$4.61m (RM20.76m), cash, to add to its existing air cargo fleet of six planes. JPA is a wholly-owned subsidiary of JP Lease Products & Services Co Ltd (JLPS), one of the largest independent arrangers of tax leases in the Japanese market. (The Edge)

Prolintas Infra Business Trust (PLINTAS) said it has settled its dispute with KL- Kuala Selangor Expressway Bhd (Latar) over a cost-sharing agreement for an undisclosed amount. A consent order has been recorded in court to formalise the settlement. As such, the matter has been resolved, it said. Latar was seeking legal action to enforce a RM46.13m arbitration award in relation with the agreement. (The Edge)

Construction engineering company Nestcon Bhd (NESTCON) has secured two contracts to develop a total of 18.99 megawatts (MWac) of large-scale solar photovoltaic (LSSPV) plants in Sabah. The group will develop a 4MWac plant in Sri Tanjong, Tawau, on Sabah's southeast coast, and a 14.99MWac plant in Bongawan, Kimanis, on the west coast of the state. (The Edge)

Datasonic Group Bhd (DSONIC) said Azlan Abdul Kadir's status as a substantial shareholder in the company has ceased following a 20m share disposal. Azlan's vehicle Demi Mekar Sdn Bhd offloaded the shares, comprising a 0.72% stake, on Dec 11 and 12. Based on back-of-the-envelope calculations, Demi Mekar, and in turn Azlan's, stake has been trimmed to 4.79% from 5.51%. (The Edge)

KKB Engineering Bhd (KKB) has initiated adjudication proceedings under the Construction Industry Payment and Adjudication Act against a contractor over outstanding claims amounting to RM10.1m. The Sarawak-based steel fabrication company, in which Cahya Mata Sarawak Bhd (CMSB) holds a 17.9% stake, said the claims are related to a RM17m sub-contract awarded by Fook Lai Construction & Development Sdn Bhd in 2012. The project involves a glove factory at Petchem Industrial Park in Tanjung Kidurong, Bintulu. (The Edge)

Loss-making Parlo Bhd (PARLO) has proposed a cash call and capital reduction to revive its financials. The ACE Market-listed travel and tour services provider said it intends to undertake a rights issue of 300.58m shares that comes with free detachable warrants to raise fresh capital after capital reduction. The rights issue will be conducted on a renounceable basis of one rights share for every one consolidated share, with one Warrant B for every four rights shares subscribed. Prior to the rights issue, the company will undertake a capital reduction of RM42m and share consolidation. At the group level, Parlo's accumulated losses stood at RM28.64m as at end-September. Upon completion of the proposed share capital reduction, the group is expected to retain earnings of RM12.36m. (The Edge)

PUC Bhd (PUC) group managing director Cheong Chia Chou has pared his stake in the loss-making digital payment solutions provider to 6.58%. Cheong offloaded 40m shares or a 1.44% stake on Monday. Bloomberg's off-market data showed that a 40m block of shares was traded on Monday at 5 sen per share or RM2m in total. The price represents a 25% premium to Monday's closing price of 4 sen. (The Edge)

Source: PublicInvest Research - 26 Dec 2024